The Indian government has granted infrastructure status to large commercial ships, a move poised to reshape the landscape for domestic ship owners and shipyards. This decision, revealed in a finance ministry notification, aligns the shipping sector with other core industries like roads, ports, and power, paving the way for easier financing and enhanced competitiveness.
What the Infrastructure Tag Entails
The infrastructure tag unlocks a range of benefits for eligible vessels, primarily focused on easing access to long-term, low-cost finance. This includes:
- Easier overseas borrowing: Facilitating access to international capital markets.
- Tax-free bonds: Enabling companies to raise funds through tax-efficient instruments.
- Tax concessions: Providing potential reductions in tax liabilities.
- Access to dedicated lenders: Opening doors to institutions like the India Infrastructure Finance Company Limited (IIFCL) and other debt funds.
To qualify for infrastructure status, commercial vessels must meet specific criteria:
- Be under Indian ownership and flag.
- Have a gross tonnage (GT) of 10,000 or more.
- Alternatively, vessels built in India with a GT of 1,500 or more also qualify, provided they are under Indian ownership and flag.
Impact on Ship Owners
Indian shipping companies have long faced challenges in expanding their tonnage due to difficulties in securing affordable financing. The infrastructure status addresses this directly by making it easier to secure loans with favorable terms, using the vessels themselves as collateral. This will enable ship owners to modernize and expand their fleets, enhancing their capacity and competitiveness in the global market. Finance Minister Nirmala Sitharaman has hailed the move as a "long-awaited boost" for Indian ship owners.
Benefits for Shipyards
The decision also provides a fillip to domestic shipyards, including listed entities like Cochin Shipyard Ltd, Mazagon Dock Shipbuilders, and Larsen & Toubro's shipbuilding arm. By reducing capital costs and improving financial flexibility, the infrastructure tag creates a more level playing field against international competitors. This can stimulate both commercial and defense shipbuilding programs, promote indigenization, and unlock opportunities in auxiliary naval platforms.
Broader Maritime Vision
This move is strategically aligned with the Maritime India Vision 2030, which aims to make India a global shipbuilding hub. The government anticipates substantial investment in the shipping sector and the development of shipbuilding clusters. India aims to be among the top 10 countries in shipbuilding by 2030 and among the top 5 by 2047.
To further support these ambitions, the Union Budget 2025-26 had also announced the creation of a Maritime Development Fund (MDF) with a corpus of ₹25,000 crore. The MDF aims to attract ₹1.5 lakh crore in investment in the shipping sector by 2030 and increase the share of Indian-flagged ships in global cargo volume to 20% by 2047. Government estimates suggest that India needs approximately $18 billion by 2047 to develop its shipbuilding, ship repair and related industries. An additional $388 billion will be needed to expand India’s shipping tonnage, along with $260 billion to develop green shipping capacity.
By granting infrastructure status to large vessels, the government is taking a decisive step towards realizing its maritime vision and fostering a self-reliant and globally competitive shipping industry.
